Options Trading News

April 23, 2013  Tue 9:26 AM CT

Kimberly-Clark is trading at all-time highs, and one investor is betting on more gains ahead.

optionMONSTER's Heat Seeker system detected the sale of 3,000 May 105 calls for $2.40 and the purchase of 3,000 June 110 calls for $1.40. Volume was below previous open interest in the May strike but above it in the June contracts, indicating that a long position was closed and rolled forward.

The move allows the investor to stay in the trade for another month while likely taking some profits off the table after the stock's big gains. The new long calls, which lock in the purchase price for the shares, show that the trader remains bullish because he or she is raising the strike price by $5. (See our Education section)

KMB is up another 0.4 percent by $106.01 this morning after hitting a lifetime high of $106.54 at the end of last week. The personal-care products company gapped higher from the $101 level on Friday after beating quarterly estimates and raising guidance.

Many investors have turned to consumer staples as alternatives to low-yielding Treasuries, looking for names that are relatively safe and pay dividends. The group is up more than 27 percent in the last 12 months, according to our proprietary researchLAB service, as shown in the screenshot below.

Less than an hour into the trading day, KMB's total option volume of 11,300 contracts already exceeds its full-session average.

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The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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